How customer centricity went from nice-to-have to a must-have in insurance

The relationship between an insurance company and a consumer has historically been a strictly transactional one. Most consumers see their insurer as a utility provider. They might only form strong opinions about a firm when something has gone wrong: A claim has been denied, a premium increased, or a processing error made.

That’s precisely why, in the digital age, insurers who rely on this relationship dynamic to remain static are taking a risk. As both competition and regulation increases, customer centricity is becoming a must-have for insurers who want to stay competitive.

As a result, many insurers are increasing their offerings to include services and products that transcend the typical customer-insurer relationship. These value add services (VAS) aren’t just about delighting customers, but about preventing them from defecting to another insurer in a competitive and transient marketplace.

Expansion of services

These VAS are varied and can range from entirely new offerings to more responsive and streamlined customer service. Examples include offering insurance as a risk prevention service, as well as wealth and retirement planning services. It might also be improving the customer experience through the use of Gen AI, and offering self service capabilities to make it easier for customers to make a claim at any time of day or night. There’s also a broad trend for more personalised insurance products enabled by big data flowing from smart devices, connected cars, wearables, and third party data sets.

The connecting thread of all these VAS is that they all offer ways for insurers to show that they care about the needs of their customers beyond the usual touchpoints like point of sale. And, according to Boston Consulting Group, “greater personalisation can boost cross-selling by as much as 20% and in some instances has helped double customer retention and triple conversion rates.”

As further proof of this trend, major industry players like Aviva, Manulife, and Legal & General are already shifting the focus of their activities to offering investment strategies, enabling digital transformation, and improving customer engagement. Meanwhile, mobile phone insurer Assurant has made it possible for customers to claim for a repair, replacement, or refurbishment in just three minutes.

According to EPAM, 39% of industry executives believe outdated technology is hindering innovation and overall business transformation, while 34% say it delays the launch of new products and services. Additionally, an overall attitude of caution that pervades the insurance industry means that some firms will be reluctant to make changes if they are not compelled to do so by regulation.

Furthermore, when it comes to regulation itself, the FCA’s Consumer Duty (2025) requires that any VAS offer “fair value” to customers, and firms can be fined for overcharging for these services.
That’s why if insurers want to invest in these services, they need to do so in good faith, not as an exercise in optics or marketing. Otherwise, beyond the regulatory exposure, there is the risk that customers will simply see these add-ons as gimmicky, and be suspicious of anyone from an insurance company trying to upsell them on “extras” that aren’t strictly necessary.

However, these challenges are not a reason to stay stagnant. In fact, VAS are an opportunity to build trust and loyalty with consumers. It helps differentiate firms in a crowded market and future proofs them against more shocks and disruption in the unpredictable insurance industry.

The goal needs to be a holistic one. True customer centricity is not just about increasing the amount of in-house products sold in one-time transactions. But rather, offering customers a support ecosystem — one with multiple coverages and services — that grows and evolves with them as their needs change over time.

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